a guide for setting school district tax...

July 2006

Truth-In-TaxationA Guide for Setting

School District Tax Rates

CAROLE KEETON STRAYHORN, Texas Comptroller

July 2006

Truth-In-TaxationA Guide for Setting

School District Tax Rates

CAROLE KEETON STRAYHORN, Texas Comptroller

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Truth-in-Taxation: A Guide for Setting School District Tax Rates (July 2006) — �

Table of ContentsIntroduction............................................................................................................................................................. 1

Part.1:.Truth-in-Taxation.Overview....................................................................................................................... 5

Part.2:.The.Effective.Tax.Rate................................................................................................................................ 9

Part.3:.The.Rollback.Tax.Rate................................................................................................................................13

Part.4:.Required.Public.Notice.and.Meeting..........................................................................................................17

Part.5:.Rollback.Elections......................................................................................................................................21

Appendix.1:.2006.Planning.Calendar.....................................................................................................................23

Appendix.2:.2006.Effective.Tax.Rate.Worksheet..................................................................................................25

Appendix.3:.2006.Rollback.Tax.Rate.Worksheet..................................................................................................29

Appendix.4:.Additional.Rollback.Protection.for.Pollution.Control.......................................................................31

Appendix.5:.Notice.of.Public.Meeting.to.Discuss.Budget.and.Proposed.Tax.Rate.—.Form.#50-280.................33

�� — Truth-in-Taxation: A Guide for Setting School District Tax Rates (July 2006)


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Truth-In-Taxation – 2006A Guide for Setting School District Tax Rates

The. Texas. Constitution,. Property. Tax. Code. and.Education. Code. embody. the. concepts. of. truth-in-taxation. to. require. school. districts. to. comply. with.certain.steps.in.adopting.their.tax.rates..The.truth-in-taxation.laws.have.two.purposes:

•. to. make. taxpayers. aware. of. tax. rate. proposals.and

•. to.allow.taxpayers,.in.certain.cases,.to.roll.back.or.limit.a.tax.increase.

The.Texas.Comptroller.of.Public.Accounts.is.autho-rized. to. issue. publications. concerning. the. adminis-tration.of.the.local.property.tax.in.Section.5.05,.Tax.Code..This.guide. to. tax. rate. setting,. also.known.as.“truth-in-taxation”,. is. prepared. as. a. public. service.to. school. districts. in. the. State. that. will. hold. public.hearings,. consider. budgets,. and. set. rates. to. impose.property.taxes..This.guide.is.specifically.intended.to.help.school.districts.set.2006.tax.rates.

By.publishing.this.guide.and.by.conducting.seminars.to. instruct. tax. assessor. collectors,. budget. officers,.and.elected.officials,.the.Comptroller’s.office.is.pro-viding. technical. assistance.. It. is. not. offering. legal.advice..Interpretations.of.law.must.be.made.by.law-yers. representing. governmental. entities.. Questions.about. the. meaning. of. the. statutes,. notice. require-ments,.and.other.matters. that.are.unclear. in. the. law.and. in. this. manual. should. be. posed. to. lawyers. and.not.to.the.Comptroller’s.Technical.Assistance.staff.

Amendments. to. the. Tax. Code. and. the. Education.Code. enacted. by. the. 79th.Texas. Legislature. during.the.3rd.Called.Session.made.a.number.of.important.changes.in.the.calculation.of.rollback.taxes,.meeting.notices,.and.other.matters..The.revisions.are.included.in.this.guide..Every.effort.has.been.made.to.provide.an.accurate.and.complete.explanation.of.the.new.law..

If. any. question. arises,. however,. about. the. explana-tion,. legal.advice.must.be.sought. in.order. to.ensure.that.tax.rates—particularly.for.this.tax.year—are.set.properly.

There. are. four. principles. to. truth-in-taxation. as. it.relates.to.school.districts:

•. Property.owners.have.the.right.to.know.of.increas-es. in. their. properties’. appraised. value. and. to. be.notified. of. the. estimated. taxes. that. could. result.from.the.new.value.

•. A. school. district. must. publish. its. proposed. tax.rate,.rollback.tax.rate.and.other.specific.informa-tion.about.its.proposed.taxes.

•. A.school.district.must.publish.a.budget.and.pro-posed. tax. rate. hearing. notice. and. hold. a. public.hearing.to.provide.an.opportunity.for.citizen.input.concerning.these.issues.

•. A.school.district.must.hold.an.election.to.ratify.a.tax.rate.adopted.above.its.rollback.rate.

After.the.appraisal.district.certifies.appraised.values,.school.districts.take.the.first.step.toward.adopting.a.tax. rate. by. calculating. the. effective,. effective main-tenance and operations (M&O). and. rollback tax rates.

Effect�ve tax rate. The. effective. tax. rate. is. a. cal-culated. rate. that. would. provide. the. school. district.with. about. the. same. amount. of. revenue. it. received.in.the.year.before,.on.properties.taxed.in.both.years..If.property.values.rise,.the.effective.tax.rate.will.go.down.and.vice.versa.

Effect�ve M&O tax rate. The. effective. M&O. rate.for.a.school.district.is.the.rate.that,.when.imposed.on.

� — Truth-in-Taxation: A Guide for Setting School District Tax Rates (July 2006)

the.current.year’s.taxable.value,.yields.state.and.local.revenue.per.student.equal.to.the.state.and.local.revenue.per.student. for. the.preceding.year. including. the.new.funds.distributed.for.property.tax.relief.and.additional.funding.for.teacher.pay.raises.and.high.schools.

Rollback tax rate. The. rollback rate. is. a. calcu-lated. maximum. rate. allowed. by. law. without. voter.approval..The. rollback. rate. for.Tax.Year. 2006.only.is. 88.67. percent. of. the. actual. 2005. M&O. rate. plus.4. cents. plus. the. school. district’s. current. debt. rate.(I&S)..Subsequent.year.rollback.rates.are.calculated.in.a.different.manner.that.will.be.described.generally.in.another.section.of.this.publication.

If.a.school.district.adopts.a.tax.rate.that.is.higher.than.the.rollback.rate,.school.board.trustees.must.hold.an.election.to.ask.voters.to.approve.the.rate.

School. districts. publish. their. rollback. rates. in. local.newspapers,. along. with. other. information. about.budget.and. tax.revenues. in.a.notice.entitled,.Notice of Public Meeting to Discuss Budget and Proposed Tax Rate.

If. taxpayers. believe. that. the. school. district. has. not.calculated. these. rates,.published. the. required.notice.or. otherwise. complied. with. other. tax. rate. adoption.laws. in. good. faith,. they.may. ask. a. district. court. to.stop.the.school.from.adopting.a.tax.rate.until.it.com-plies.with.the.laws.

Legislative Changes in 2006Rate Caps

House. Bill. (H.B.). 1,. 79th. Legislature,. 3rd. Called.Session:. Beginning. in. the. 2006. tax. year,. a. school.district.at.the.$1.50.per.$100.of.property.value.M&O.tax. rate. cap.must. compress. its.M&O. rate.by.88.67.percent,.reducing.the.rate.to.$1.33..For.districts.with.an.M&O.rate.higher.or. lower. than.$1.50,. the.com-pression. rate. is. also.88.67.percent..The.prior. $1.50.M&O.tax. rate. limit.or.cap.will.be.17.cents. ($0.17).above.the.compression.rate.in.any.tax.year.

Rollback Calculation

H.B. �.changes.the.school.district.rollback.rate.calcu-lation..For.its.2006.rollback.rate.calculation,.a.school.district.simply.multiplies.the.adopted.2005.M&O.rate.

by.88.67.percent,.adds.4.cents.($0.04).and.adds.the.current.debt.rate..The.new.law.also.sets.a.mandatory.rollback elect�on date of September 30, �006,. for.all. school. districts. that. adopt. tax. rates. above. their.rollback. rates.. School. board. trustees. must. order. a.rollback. election. by. August. 31,. 2006.. If. the. elec-tion.is.not.held.on.September.30,.the.school.district.trustees.may.not.adopt.a.tax.rate.for.the.2006.tax.year.that. exceeds. the. school. district’s. rollback. rate.. The.Secretary.of.State.is.required.to.prescribe.procedures.necessary. to. implement. this. law. and. to. ensure. the.proper. and. orderly. conduct. of. 2006. rollback. elec-tions.. In. subsequent. years. election. dates. revert. to.pre-2006.law.(Section.41.001,.Election.Code).

Effective M&O Rate

H.B. �.amends.Section.26.08,.Tax.Code,.to.create.a.new. definition. for. a. school. district. effective. M&O.rate..The.effective.maintenance.and.operations.rate,.as.mentioned.above,. is. the. rate. that,.when. imposed.on. the.current.year’s. taxable.value,.yields.state.and.local.revenue.per.student.equal.to.the.state.and.local.revenue.per.student.for.the.preceding.year.including.the.new.funds.distributed.for.property.tax.relief.and.additional. funding. for. teacher. pay. raises. and. high.schools..The effect�ve M&O calculat�on �s not used �n the �006 rate sett�ng process, but w�ll be used �n subsequent years.

Notices

H.B. �. adds. Section. 44.0041,. Education. Code,. and.requires.school.districts.to.post.a.summary.of.the.pro-posed.budget.concurrently.with.the.publication.of.the.district’s.Notice of Public Meeting to Discuss Budget and Proposed Tax Rate..A.school.district.must.post.the. budget. summary. on. the. school’s. Internet. Web.site,.or,.if.the.district.does.not.have.a.Web.site,.in.the.district’s.central.administration.office..

H.B. �.also.adds.a.separate.line.listing.the.proposed.M&O.rate.and.debt.rate.to.the.school.district’s.Notice of Public Meeting to Discuss Budget and Proposed Tax Rate.. The. notice. must. include. a. line. entitled.“Maintenance. Tax”. and. another. entitled. “School.Debt. Service. Tax. Approved. by. Local. Voters.”. A.model.school.district.notice.of.public.meeting.is.pro-vided.in.this.manual.

Senate B�ll 567,. 79th.Legislature,.Regular.Session,.adds.three.additional.sections.to.this.notice.for.2006,.

Truth-in-Taxation

Truth-in-Taxation: A Guide for Setting School District Tax Rates (July 2006) — 3

Truth-in-Taxation

including.a.comparison.of.last.year’s.and.this.year’s.proposed. budget,. a. comparison. of. appraised. and.taxable. values. for. the. prior. year. and. this. year,. and.a.section.listing.the.school’s.outstanding.and.unpaid.bonded.indebtedness..

Tax Bills

H.B. �. requires. tax. assessor-collectors. to. separate.M&O. and. interest. and. sinking. (debt). tax. rates. on.school.district.tax.bills.

Tax Ceilings

An. important. provision. in. H.B. �. did. not. take.effect—additional. tax. relief. to. persons. age. 65. and.older.or.with.disabilities.who.have.school.tax.limits.or.freezes.on.their.residence.homesteads..Contingent.upon. a. proposed. constitutional. amendment,. the.bill.amended. Section. 11.26. of. the. Tax. Code. to. allow.taxpayers.who.qualified.prior.to.2006.for.the.special.exemptions.to.have.their.school.taxes.reduced.begin-ning.in.�007..The.reduction.would.have.been.a.frac-tional.decrease.based.on.a.division.of. the.2006. tax.rate.by.the.2005.rate..In.addition,.the.Education.Code.and.Government.Code.were.amended.to.provide.for.

adjustments. in. State. funding. and. the. Comptroller’s.annual.property.value.study. to. fund.school.districts.for.any. revenue. lost. as.a. result.of. the.proposed. tax.reductions..Because.this.school.tax.relief.for.persons.age.65.and.older.or.with.disabilities.was.contingent.on. the. approval. of. a. constitutional. amendment. and.the. proposed. constitutional. amendment. was. not.enacted. by. the. Legislature,. the. new. law. does. not.grant.proportional.tax.relief.for.persons.with.“frozen”.school.taxes.

2007 Tax Year ChangesRate Caps

For. 2007,. H.B. �. changes. the. M&O. tax. rate. com-pression. percentage. to. 66.67.. This. percentage. may.change. in. subsequent. years. based. on. the. Texas.Education.Agency’s.determination..

Rollback Calculation

A. school. district’s. rollback. rate. for. 2007. and. sub-sequent. years. will. be. calculated. as. follows:. the.LESSER.of. (1). the.sum.of. the.current.compression.

Texas ConstitutionThe Texas Constitution sets out the general requirements for truth-in-taxation. The Texas Legislature amended Chapter 26, Tax Code, to set out the specifics.

Article VIII, Section 21. Increase in Total Property Taxes; Notice and Hearing; Calculation.

(a) Subject to any exceptions prescribed by general law, the total amount of property taxes imposed by a political subdivi-sion in any year may not exceed the total amount of property taxes imposed by that subdivision in the preceding year unless the governing body of the subdivision gives notice of its intent to consider an increase in taxes and holds a public hearing on the proposed increase before it increases those total taxes. The Legislature shall prescribe by law the form, content, timing and methods of giving the notice and the rules for the conduct of the hearing.

(b) In calculating the total amount of taxes imposed in the current year for the purposes of Subsection (a) of this section, the taxes on property in territory added to the political subdivision since the preceding year and on new improvements that were not taxable in the preceding year are excluded. In calculating the total amount of taxes imposed in the preced-ing year for the purposes of Subsection (a) of this section, the taxes imposed on real property that is not taxable by the subdivision in the current year are excluded.

(c) The Legislature by general law shall require that, subject to reasonable exceptions, a property owner be given notice of a revaluation of his property and a reasonable estimate of the amount of taxes that would be imposed on his property if the total amount of property taxes for the subdivision were not increased according to any law enacted pursuant to Subsection (a) of this section. The notice must be given before the procedures required in Subsection (a) are instituted.


percentage. times. $1.50. (or. times. the. 2005. M&O.rate.for.school.districts.with.2005.M&O.rates.above.$1.50),.plus.4.cents,.plus.the.rate.that.is.equal.to.the.sum.of.any.differences.between.the.adopted.tax.rate.and.the.rollback.tax.rate.approved.by.the.voters.for.

2006.and.subsequent.years,.plus.the.current.debt.rate.OR.(2).the.sum.of.the.effective.M&O.tax.rate.(previ-ously.defined).plus.the.rate.equal.to.the.current.state.compression.percentage.times..06.(this.amounts.to.4.cents.in.2007),.plus.the.current.debt.rate.


PART 1:

Truth-in-Taxation Overview

Creating.a.budget.and.adopting.a.property.tax.rate.to.support.that.budget.are.major.functions.of.the.school.board..This.is.accomplished.by.following.legislative.guidelines. to. insure. the. public. is. informed. of. any.increases.

Important Dates in Truth-In-TaxationThe. Property. Tax. Code. establishes. target. dates. for.many. truth-in-taxation. activities.. Although. circum-stances. may. force. appraisal. districts. or. school. dis-tricts. to. alter. their. timetables,. this. typical. calendar.should.provide.a.framework.for.activities.

School District Calculations Truth-in-taxation.requires.school.districts.to.calculate.two. rates. after. receiving. a. certified. appraisal. roll.from. the. chief. appraiser—the.effective. tax. rate. and.the.rollback.tax.rate..School.districts.are.not.required.to.publish.the.effective.tax.rate,.but.must.publish.the.rollback.rate.in.a.public.meeting.notice..The.school.board.must:

•. determine. the. effective. tax. rate. and. the. rollback.tax.rate;

•. decide.how.much.revenue. it.needs.and.calculate.the.rate.required.to.raise.that.amount;

•. concurrently. post. a. budget. sum-mary. on. its. Web. site. and. publish.notice.on.the.budget.and.proposed.tax.rate;

•. hold. a. hearing. on. the. budget. and.proposed.tax.rate;

•. adopt.a.budget.and.then.adopt.the.tax.rate;.and

•. administer. a. rollback. election. if.the. adopted. rate. exceeds. the. roll-back.rate.

A. planning. calendar. for. these. steps.appears.on.Appendix.1..Part.5.of.the.manual.discusses.rollback.elections.

STEP 1:Calculate Required Rates.All.school.districts.must.calculate.an.effective. tax. rate. and. a. rollback. tax.rate..School.districts.must.publish.the.rollback.tax.rate.

A. school. district’s. effective tax rate.is. a. calculated. rate. that. is. generally.equal.to.the.prior.year’s.taxes.divided.

Exhibit 1:May 15 The chief appraiser sends notices of appraised value.

June 7 The chief appraiser certifies an estimate of taxable value for schools with a July 1 fiscal year.

July 20 The appraisal review board approves the appraisal records.

July 25 The chief appraiser certifies the approved appraisal roll to each school district.

Aug.-Sept.* A school district adopts its budget according to its fiscal year but first must publish a NOTICE OF PUBLIC MEETING TO DISCUSS BUDGET AND PROPOSED TAX RATE 10 to 30 days before a public meeting date. (School districts with a July 1 fiscal year adopt budgets in June and comply with notice and hearing provisions during June). After adopting the budget, the school adopts a tax rate.

Aug. 31 A school district that adopts a tax rate above the rollback rate MUST call for an election to ratify the tax rate on or before this date.

Sept. 30 A school district must adopt its tax rate BEFORE this date or 60 days after the school district receives the appraisal roll, whichever date is later. A school district that adopts a tax rate above the rollback rate MUST hold a rollback election on this date.

October The assessor-collector prepares and mails tax bills.

* Note: A school district that receives an equalized wealth notice from the commissioner of educa-tion may not adopt its tax rate until the commissioner certifies that the district has reached its equalized wealth level [Sec. 41.004(c), Education Code]. At the same time it publishes the tax rate meeting notice, a school district must post a summary of its proposed budget.

6 — Truth-in-Taxation: A Guide for Setting School District Tax Rates (July 2006)

Part 1: Truth-in-Taxation Overview

by. the.current. taxable.value.of.properties. that.were.also. on. the. tax. roll. in. the. prior. year.. The. resulting.tax. rate,. used. for. comparison. only,. shows. the. rela-tion.between.the.prior.year’s.revenue.and.the.current.year’s.values.

The.rollback.tax.rate.is.a.calculated.rate.that.limits.the.school.district. tax.rate. to.88.67.percent.of. the.2005.adopted.M&O.rate.plus.four.cents.($.04).per.$100.of.taxable.value.plus.the.current.debt.rate..For.the.2007.rollback.rate.calculation,.the.88.67.percent.compres-sion.rate.is.changed.to.66.67.percent.and.school.dis-tricts.must.calculate.and.consider.an.effective.M&O.tax.rate..The.debt.service.portion.of.the.rollback.tax.rate. is. the. current. year’s. debt. payments. divided. by.the.current.year’s.property.values..The.debt. service.tax.rate.may.rise.as.high.as.necessary.to.cover.quali-fied.debt.expenses..The.overall.rollback.rate.calcula-tion.is.explained.in.greater.detail.in.Part.3.

Fa�lure to comply..If.a.school.district.fails.to.calculate.or. publish. the. required. rates. and. notices. properly,. a.property.owner.in.the.district.may.seek.an.injunction.to.prohibit.the.school.district.from.adopting.a.tax.rate..The.district.court.may. issue. the. injunction. if. it. finds.that.the.school.district’s.failure.was.not.in.good.faith.

Consol�dat�on of two or more school d�str�cts. A.school.district.that.was.two.or.more.school.districts.in. the. prior. year. handles. the. effective. and. rollback.rate.calculations.differently..The.consolidated.school.district. combines. last. year’s. taxes. for. each. school.district.and.divides.by.the.total.values.for.the.current.year. for. the. new. consolidated. school. district.. First,.calculate. last. year’s. taxes. for. each. school. district.in. lines.1-15.of. the.Effective Tax Rate Worksheet. in.Appendix.2..Then,.combine.last.year’s.taxes.on.line.15.for.each.school.district. to.obtain.last.year’s.total.taxes.. The. calculation. for. a. tax-base. consolidated.school. district. differs. slightly. from. a. whole. con-solidation..If.the.consolidation.is.for.M&O.purposes.only,.each.school.district.will.calculate.its.own.debt.service.rate.for.debt.purposes.

The. Education. Code. provides. that. two. or. more.school. districts. may. create. a. consolidated taxing district. by. merging. their. tax. bases..A. consolidated.taxing.district.requires.voter.approval.in.each.compo-nent. district.. Questions. arise. whether. consolidating.tax.bases.creates.a.new.taxing.unit.for.truth-in-taxa-tion.purposes..The.Comptroller’s.office.does.not.con-sider.the.district.to.be.a.new.unit.for.these.purposes.

because. tax. rates. exist. on. which. the. school. district.may.calculate.a.rollback.rate..A.consolidated.school.district. should. contact. its. legal. counsel. for. further.advice.if.it.believes.that.it.is.a.new.taxing.unit..The.Comptroller’s.office.interprets.tax.base.consolidation.as.a.regular.consolidation.of.school.districts,.because.each.school.district.levied.taxes.in.the.prior.year.

STEP 2: Draft a budget and decide how much tax to levy.The.school.district.must.identify.its.needs.and.draft.a.budget.to.meet.those.needs..The.school.district.must.decide. how. much. property. taxes. along. with. state.funds.are.necessary.to.fund.that.budget.and,.based.on.current. year’s. values,. what. M&O. rate. is. necessary..The.school.district.must.also.determine.what.its.pay-ments.for.debt.service.will.be.

The.school.district’s.governing.body.must.also.deter-mine. how. much. surplus. funds,. if. any,. it. plans. to.expend.from.its.M&O.and.debt.service.funds..It.must.determine.the.final.amount.of.property.taxes.needed.for.the.budget.

Truth-in-taxation. laws. explicitly. address. the. debt.service.rate.component.of.a.school.district’s.overall.tax.rate..The.adopted.debt.service.rate.must.equal.the.debt. rate. published. in. the. school’s. notice. of. public.meeting.

STEP 3: Adopt a school district’s tax rate.School.districts.have.a. special.notice. for. the.public.meeting.on.their.budget.and.proposed.tax.rate..While.other. taxing. units. are. required. to. follow. the. notice.and. hearing. requirements. of. Tax. Code. Chapter. 26,.school. districts. must. follow. the. notice. and. hearing.requirements.of.Education.Code.Sections.44.004.and.44.0041..Section.44.004.sets.out.the.items.to.include.in. the. budget. hearing. and. proposed. tax. rate. notice..See.Appendix.5.

School.districts.should.review.the.general.provisions.in.Step.1.for.adopting. the. tax.rate.after.holding. the.publicized. hearing. on. the. budget. and. proposed. tax.rate.

Budget and proposed tax rate not�ce. The. notice.entitled. NOTICE OF PUBLIC MEETING TO DISCUSS BUDGET AND PROPOSED TAX RATE.



(Appendix.5).is.published.in.a.local.newspaper.10.to.30.days.before.the.public.meeting.date..At.the.same.time,. a. school. district. must. post. a. summary. of. the.proposed. budget. on. its. Web. site. or. at. the. district’s.central.administrative.office..The.quarter-page.meet-ing. notice. includes. a. comparison. of. property. tax.rates,.comparison.of.proposed.budget.and.last.year’s.budget,. comparison. of. property. taxes. on. an. aver-age. residence. and. unencumbered. fund. balances..The.notice.also.includes.information.about. the.total.appraised.and. taxable.value. for. all. property. and.all.new. property. for. last. year. and. this. year. and. a. sec-tion.listing.the.school’s.total.outstanding.and.unpaid.bonded.indebtedness..The.rollback.rate.is.also.stated.in.the.notice..If.a.school.board.adopts.a.tax.rate.above.its.2006.rollback.tax.rate,.the.school.board.must.hold.an.election.to.ratify.the.adopted.tax.rate.

School d�str�ct w�th July � f�scal year. A.school.dis-trict.may.change.its.fiscal.year.to.begin.July.1.rather.than.September.1.

If.the.school.district.has.a.July.1.fiscal.year,.then.the.chief.appraiser.shall.certify.an.estimate.of.the.school.district’s.taxable.values.to.the.school.district’s.asses-sor. by. June. 7.. A. school. district. uses. the. certified.estimate.in.preparing.its.budget.and.tax.rate.hearing.notice. if. it. has. not. received. a. regular. appraisal. roll.on.or.before.June.7..The.school.district.may.adopt.its.budget.using. the.estimate.but.may.not.adopt. its. tax.rate.until. the.district. receives. the.certified.appraisal.roll.. After. receiving. a. certified. appraisal. roll,. the.school.district.must.publish.a.revised.notice.and.hold.another.public.meeting.if.it.will.adopt.a.tax.rate.that.exceeds.the.rate.proposed.in.the.first.notice.(that.used.the. estimated. values). or. will. adopt. a. tax. rate. that.exceeds. the. school’s. rollback. rate. calculated. using.the.certified.appraisal.roll.

Rate l�m�tat�on. Education. Code. Section. 45.003.is. amended.by.H.B. �. and. limits. a. school.district’s.M&O. rate. for. any. year.. The. rate. may. not. exceed.the. rate. equal. to. the. sum. of. $0.17. and. the. product.of. the. state. compression. percentage. as. determined.by. Section. 42.2516,. multiplied. by. $1.50..A. school.district.that.adopted.a.2005.M&O.rate.above.$1.50,.as.permitted.by.special.law,.may.not.exceed.the.rate.equal.to.the.sum.of.$0.17.and.the.product.of.the.state.compression. percentage. multiplied. by. the. district’s.M&O.tax.rate.for.2005.

A.school.district.also.may.adopt.a.rate.up.to.$0.50.for.“new”.debt.plus.a.rate.for.“old”.debt..“New”.debt.is.debt. authorized.after.April.1,.1991.and. issued.after.September. 1,. 1992;. “old”. debt. is. debt. authorized.prior. to. those. dates.. The. Education. Code. requires.school.districts.to.demonstrate.to.the.Texas.Attorney.General. the. projected. ability. to. pay. all. debt. issued.after. September. 1,. 1992,. with. a. rate. not. to. exceed.$0.50.. School. districts. should. contact. the. Texas.Attorney.General.with.questions.about.new.debt.

Finally,.Tax.Code.Chapter.313,.the.Texas.Economic.Development.Act,.provides.for.limiting.the.appraised.value. of. certain. property. used. to. create. jobs.. For. a.school. district. that. grants. an. application. limiting. a.property’s. value,. the. school. board. may. not. adopt. a.tax. rate. that.exceeds. its. calculated. rollback. tax. rate.for.the.two.tax.years.after.it.approves.that.application.for.the.limitation.

Rate Adopt�on. The. school. board. may. adopt. the.budget.and.tax.rate.after.the.public.meeting..Or,.the.board.may.adopt.the.budget.and.wait.to.adopt.the.tax.rate..School.districts. subject. to.an.equalized.wealth.notice.must.wait.to.adopt.a.tax.rate.until.the.commis-sioner.of.education.certifies.that.the.wealth.is.equal-ized. [Education. Code. Section. 41.004(c)]..A. school.district.must.adopt.the.tax.rate.before.September.30.or. 60. days. after. receiving. certified. appraisal. roll,.whichever.date.is.later.

Open meet�ngs not�ces.. The. school. district. must.post. notice. of. the. meeting. in. compliance. with. the.open.meetings. law,.Government.Code.Chapter.551..The.meeting.must.be.open.to.the.public.

Agenda �tem..Adoption.of.the.tax.rate.must.be.a.sep-arate. item.on. the.agenda. for. the.meeting..State. law.requires. school. districts. (Section. 44.004,. Education.Code).to.adopt.a.budget.before.adopting.the.tax.rate..School.districts.may.adopt.a.budget.and.a.tax.rate.at.the. same. meeting. as. long. as. the. budget. is. adopted.first.as.a.separate.item.

Off�c�al act�on. The.school.district’s.governing.body.must.adopt.a.tax.rate.by.official.action.and.set.it.out.in.an.ordinance.or.resolution..School.districts.should.consult.with.their.attorneys.regarding.the.instrument.to.use.for.rate.adoption.

School.districts.that.adopt.a.rate.above.the.effective.tax. rate.must.use. special. language. in. the.motion. to.



adopt.. Section. 26.05(b),. Tax. Code,. states. that. the.motion.to.adopt.an.ordinance,.resolution.or.order.set-ting.a.tax.rate.that.exceeds.the.effective.tax.rate.must.be.made.in.the.following.form:.“I.move.that.property.taxes. be. increased. by. the. adoption. of. a. tax. rate. of.(specify.tax.rate).”.In.the.order,.ordinance.or.resolu-tion,.the.school.districts.must.use.larger.type,.include.an. example. of. the. maintenance. tax. increase. on. a.$100,000. home. and. state. that. the. adopted. tax. rate.will.raise.more.taxes.for.M&O.than.the.prior.year’s.tax. rate.. If. the. school. district. operates. an. Internet.Web. site,. the.district.must. also. include. similar. lan-guage.about.increasing.M&O.taxes.on.its.home.page..School. districts. should. refer. to. Section. 26.05(b)(1).and.(2),.Tax.Code,.for.the.exact.wording.of.the.order,.ordinance.or.resolution.and.Web.site.notice.

What. happens. when. property. taxation. will. be.decreased,. rather. than. increased?. What. kind. of.motion.is.acceptable?.And.may.school.districts.pro-vide.more.information.in.the.ordinance.or.resolution.to. explain. the. tax. rate’s. effects?. The. law. does. not.prohibit. explanatory. information.. The. law,. in. fact,.provides. mandatory. motion. language. only. when.the. new. tax. rate. will. exceed. the. effective. tax. rate..Because. of. the. provisions. of. H.B. �,. most,. if. not.all,. school. districts. will. adopt. a. 2006. tax. rate. that.does.not.exceed.the.calculated.effective.rate..School.boards.with.questions.regarding.the.correct.methods.and.phrasing.of.an.ordinance.or. resolution. to.adopt.a. tax. rate. should. discuss. these. questions. with. their.legal.counsel.

Mun�c�pal school d�str�ct and �ts c�ty. A.municipal.school.district. follows. the.city.boundaries. in.which.the.district. is. located..The.municipal. school.district.board.and.the.city.council.shall.jointly.hold.any.hear-ing.required.by.law.for.adopting.the.school’s.annual.budget. and. property. tax. rate.. Adopting. the. school.budget.and.the.school.tax.rate.requires.an.affirmative.vote.of.a.majority.of.the.school.board.members.pres-ent.and.voting.and.at.least.three-quarters.of.the.total.of.the.voting.school.board.members.and.city.council.members.that.are.present.and.voting..If.a.quorum.of.the.city.council.is.not.present.at.the.hearing.to.adopt.

the.budget. and. tax. rate,. then. the. school. board.may.adopt.the.budget.and.tax.rate.without.regard.to.votes.from.the.city.council.members.

Fa�lure to comply.. If. a. school. board. fails. to.comply. with. the. hearing,. notice. or. rate. adopt-ing. process. in. good. faith,. a. property. owner. in.the. school. district. may. seek. an. injunction.. The.injunction. stops. the. district. from. sending. tax. bills.until. the. school. district. convinces. the. district.court. that. it. has. complied. with. the. law.. A. prop-erty.owner.must.act. to.enjoin.collections.before.the..school. district. delivers. substantially. all. of. its. tax.bills.

STEP 4: Administer a rollback election, if necessary.A.school.district.is.required.to.hold.an.automatic.roll-back.election—no.petition.process. is.necessary—to.ratify. a. current. year’s. tax. rate,. if. the. school. board.adopts.a. tax. rate.above. the. rollback. rate.which,. for.2006,. is. above. the. district’s. compressed. M&O. tax.rate.plus.its.2006.debt.rate.plus.4.cents.($0.04)..Go.to.Part.5.of.this.manual.for.more.about.administering.a.rollback.election.

Step 5:Prepare and mail tax bills.Section. 31.01(c),. Tax. Code,. requires. taxing. units,.including.school.districts,. to.prepare.and.mail.a. tax.bill.to.each.property.owner.by.October.1.or.as.soon.thereafter. as. practicable.. The. bill. must. include. the.information.listed.in.Section.31.01(c)..For.school.dis-tricts. only,. additional. information. must. be. included.on.the.bills.or.on.a.separate.statement..Section.31.01.(d-1).requires.separate.lines.for.(1).the.school.district.M&O.rate,.(2).the.school’s.outstanding.debt.rate,.(3).the.M&O.rate. for. the.preceding. tax.year;. (4). if. for.the.current.tax.year.the.school.district.imposed.taxes.for.debt,.the.debt.rate.for.the.current.tax.year,.(5).if.for.the.preceding.tax.year.the.school.district.imposed.taxes.for.debt,.the.debt.rate.for.that.year,.and.(6).the.total.tax.rate.of.the.school.district.for.the.proceding.tax.year.


The. effective. tax. rate. enables. the. public. to. evalu-ate. the.relationship.between. taxes.for. the.preceding.year.and.for.the.current.year,.based.on.a.tax.rate.that.would.produce.the.same.amount.of.taxes.if.applied.to.the.same.properties.taxed.in.both.years.

The.calculation.process.starts.after.the.chief.appraiser.delivers. to. the. school.district. the.certified.appraisal.roll.and.the.estimated.values.of.properties.under.pro-test..The.school.district’s.tax.assessor.determines:

(1). the.total.appraised.and.taxable.value.of.property.in.the.school.district,

(2). the. total. appraised. and. taxable. value. of. new.improvements.and

(3). the.total.taxable.property.annexed.since.the.pre-ceding.year.

The. assessor. submits. all. of. this. information. to. the.school.board..The.school.board.designates.an.officer.or.employee.(often.the.tax.assessor.but.not.necessar-ily).to.calculate.the.effective.tax.rate.and.the.rollback.tax.rate..School.districts.are.not. required. to.publish.the.effective.tax.rate.

Calculating the Effective Tax RateCalculating. the. effective. tax. rate. requires. the. prior.year’s.taxes.and.the.current.year’s.taxable.value.for.property. taxed. in.both.years..Dividing. the. taxes.by.the.value.(and.multiplying.by.100.to.convert.to.a.rate.per.$100.of.value).produces.the.effective.tax.rate,.as.illustrated.in.Exh�b�t �.

In.practice,. the. calculation. is. slightly.more. compli-cated..The.worksheets.on.pages.25-27.provide.step-by-step.details.of.these.calculations..What.follows.is.a.general.summary.

Prior Year’s Taxes Less Taxes on Property Lost This YearTo.calculate.a.2006.effective. tax. rate,.a. school.dis-trict. must. first. determine. its. total. 2005. taxes.. The.effective. and. rollback. rate. calculations. begin. with.the. total. taxes. and. values. for. the. prior. year. at the time of the rate calculations..These.totals.include.all.supplements. and. corrections. that. have. occurred. to.the.tax.roll.since.the.prior.year’s.certification.and.tax.rate. adoption.. However,. corrections. ordered. under.Tax.Code.Section.25.25(d).are.not.included.in.these.adjusted.total.taxes.and.values.

Section. 25.25(d). corrections. are. late. appraisal. roll.changes.ordered.by.the.appraisal.review.board.(ARB).to.correct.one-third.over-appraisal.errors..Taxpayers.may. file. for. such. corrections. before. taxes. on. the.property.become.delinquent..Typically,.taxpayers.file.for. these. corrections. after. receiving. their. tax. bills..Some. school. districts. with. substantial. amounts. of.value. reductions. through. Section. 25.25(d). experi-ence. revenue. losses. in. that. budget. year..To. include.these.changes.in.the.adjusted.total.taxes.and.values.in.calculating.the.effective.and.rollback.tax.rates.for.the.current.year.would.result.in.lower.effective.and.roll-back. rates. for. the. school. district..Thus,. the. Section.25.25(d).corrections.are.excluded.

PART 2:

The Effective Tax Rate

Exhibit 2: Calculating the Effective Tax Rate

Prior Year’s Taxes Less Taxes on Property Lost This Year _______ (divided by) ________ x $100 Current Value of Property Taxed in the Prior Year

�0 — Truth-in-Taxation: A Guide for Setting School District Tax Rates (July 2006)

The.appraisal.district.may.be.able.to.assist.the.school.district.in.identifying.supplements.and.corrections.for.the.prior.year.

School.districts.also.may.be.required.to.refund.taxes.for. tax. years. preceding. last. year.. School. districts.include. the. refunded. debt. taxes. in. “last. year’s. debt.levy”.and. total. refunded. taxes. in.“last.year’s. levy.”.School.districts.include.all.types.of.refunds.for.years.preceding the prior year—court. decisions,. Section.25.25(b).and.(c).corrections.and.Section.31.11.pay-ment.errors—for.tax.years.preceding.tax.year.2005.

For.example,.in.2006.a.district.court.approved.reduc-ing.a.property.owner’s.2003,.2004.and.2005.taxable.values,. resulting. in. three. years. of. tax. refunds. from.the.2005.property.taxes..The.school.district.includes.the.refunded.2003.and.2004.taxes.in.the.2005.taxes..A.second.example. is.a. school.district. that. refunded.part.of.a.2001.payment.for.a.Section.25.25(c).clerical.error.. The. school. district. includes. the. refunded. tax.amount.in.the.total.2005.taxes.

A. separate. provision. provides. for. any. 2005. court-ordered.refunds. to.be. included.as.a.separate.step. in.the. rate. calculation..A. school. district. may. increase.the.prior. tax.year’s. taxes. to. reflect. lost. taxes. in. the.prior.tax.year.because.a.court.overruled.an.ARB.deci-sion.with.a.lower.taxable.value.

The. result. of. including. these. refunds. in. last. year’s.levy.is.higher.effective.and.rollback.rates.for.school.districts..These.higher.rates.give.school.districts.the.ability.to.recapture.revenue.removed.from.last.year’s.taxes.to.return.money.to.taxpayers..The.tax.collector.has.information.about.refunds.

Truth-in-taxation. laws. also. require. the. school. dis-trict. to. reduce. last.year’s. total. taxes. for. the.amount.of. “lost. property. levy.”. “Lost. property. levy”. is. the.amount.of. taxes.on.property.value. that.was. taxable.in.the.preceding.year.but.is.not.taxable.in.the.current.year..Property.value.not.taxed.in.the.current.year.may.have.been.deannexed.by.the.school.district,.received.a. new. exemption. or. qualified. for. special. appraisal.in. the. current. year..The. appraisal. district. has. value.information.on.these.properties.

Property.first.qualified.for.a.new.exemption.does.not.include. freeport. property. under. Tax. Code. Section.11.251.or.for.property.receiving.a.tax.abatement.

For.homeowners.age.65.or.older.or.disabled,.the.dis-trict.adjusts.last.year’s.value.by.subtracting.the.value.of.homesteads.with.tax.ceilings.

Subtracting.the.revenue.lost.because.of.these.changes.gives.the.school.district’s.adjusted.2005.taxes.

Current Value of Property Taxed in the Prior YearBefore.calculating.its.effective.rate,.a.school.district.must.also.adjust.the.2006.values..The.school.district.begins.with.the.total.taxable.value.on.the.2006.certi-fied. appraisal. roll. and. adds. the. value. of. properties.still. under. protest. or. known. but. not. appraised. for.2006..The.school.district.then.subtracts.the.value.of.new. property—property. annexed. since. January. 1,.2005.and.improvements.new.to.the.2006.tax.roll..The.result.is.the.2006.taxable.values.adjusted.to.include.only. the. property. that. was. taxed. in. both. 2005. and.2006.

The.district.adjusts.its.2006.values.by.subtracting.the.2006.values.of.homesteads.with.tax.ceilings.and.any.new.value.subject.to.a.Chapter.313.limitation.agree-ment..The.homesteads.with.tax.ceilings.are.for.both.the.homeowners.age.65.or.older.or.disabled.

A. school.district. also. excludes. the. taxable. value.of.property. exempted. for. the. current. tax. year. for. the.first. time. as. pollution. control. property.. Since. the.taxable. value. of. exempt. property. is. zero,. such. an.interpretation.would.not.affect.the.current.total.value..Legislative. intent. would. appear. to. require. some.adjustment..School.districts.that.wish.to.exclude.the.market.value.of.this.exempt.property.should.consult.with.their.attorney.

Propert�es under protest. If. a. property’s. value.is. under. protest. when. the. school. district. receives.the. certified. appraisal. roll,. the. chief. appraiser. sub-mits. both. the. appraisal. district’s. and. the. taxpayer’s.estimated. values.. In. calculating. the. effective. and.rollback. tax.rates,. the.school.district.uses. the. lower.taxable.value.

If. the. property. owner. did. not. estimate. a. value,. the.chief. appraiser. must. estimate. the. outcome. of. the.ARB.appeal..Two.rules.govern.this.estimate:

Part 2: The Effective Tax Rate

Truth-in-Taxation: A Guide for Setting School District Tax Rates (July 2006) — ��

If.this.year’s.appraised.value.is.the.same.or.less.than.last.year’s,.the.chief.appraiser.estimates.the.value.that.would.be.assigned.if.the.property.owner.wins.

If. this. year’s. value. is. greater. than. last. year’s,. the.chief.appraiser.uses.last.year’s.value..However,.if.it’s.likely. that. the.ARB.will. reduce. the.value,. the.chief.appraiser.should.estimate.the.ARB.value.

Propert�es not �ncluded at cert�f�cat�on. Tax.Code.Section.26.01(d).also.requires.the.chief.appraiser.to.give. school. districts. a. list. of. those. taxable. proper-ties.that.the.chief.appraiser.knows.about.but.are.not.included.at. the. time.the.chief.appraiser.certifies. the.appraisal.roll..These.properties.also.are.not.on.the.list.of.properties.that.are.still.under.protest.

On.this.list.of.properties,.the.chief.appraiser.includes.the.market.value,.appraised.value.and.exemptions.for.the.preceding.year.and.a. reasonable.estimate.of. the.market.value,.appraised.value.and.exemptions.for.the.current.year.

A.school.district’s.assessor.shall.use.the.lower.mar-ket,. appraised. or. taxable. value. (as. appropriate). for.computing.the.school.district’s.effective.and.rollback.tax.rates.

New property value. New.property.value.will.gener-ate.new.revenue.for.a.school.district..It.helps.to.offset.property.value.losses.for.new.exemptions.and.special.appraisals. granted. for. the. first. time. in. the. current.year.. The. school. district. will. deduct. new. property.value.from.the.2006.appraised.values.in.the.effective.tax.rate.calculation.

The.chief.appraiser.will.supply.the.value.of.real.and.personal.property.new.to.the.2006.appraisal.roll..For.real.property,.new.value.includes.additions.to.exist-ing.improvements.(such.as.a.garage).or.new.separate.structures. added. to. a. property. containing. existing.improvements.(such.as.a.company.expansion).made.after. January. 1,. 2005.. Only. the. value. of. the. indi-vidual.new.improvement.is.new.value..The.increased.value. on. any. existing. structures. is. not. new. value..For. personal. property,. new. value. includes. only. the.personal.property. that. is. located. in.a.new. improve-ment.and.that.entered.the.school.district.after.January.1,.2005..New.inventory.in.an.existing.building,.new.mobile.homes.and.new.vehicles.do.not.count.as.new.personal.property.value.

New.property.value.also.will.include.property.value.in.the.current.year.that.was.previously.exempt.under.an. abatement. agreement.. The. amount. includes. the.value. of. a. property. that. had. a. portion. of. its. value.excluded.because.of. a. tax.abatement. agreement. for.all.or.a.part.of.the.property,.less.the.value.of.the.prop-erty. included. last. year.. New. property. value. for. tax.abatements. applies. to. agreements. that. are. expiring.and. to. agreements. that. have. a.declining.percentage.or.amount.of.exemption.each.year.

The CalculationDividing.the.adjusted.2005.taxes.by.the.adjusted.2006.taxable.values.and.multiplying.by.$100.produces.the.2006.effective.tax.rate,.as.illustrated.in.Exh�b�t 3.



Adjusted 2005 Taxes_______ (divided by) _______ x $100 = 2006 Effective Tax Rate

Adjusted 2006 Taxable Value

* Do not include Section 25.25(d) corrections for one-third over-appraisal errors.** Do not include TIF taxes if there is no TIF captured value or any value classified as new property value.

Exhibit 3: Detail Steps in Calculating the Effective Tax Rate

2005 Taxes(on date of the calculation)*

+Taxes on 2005 values

lowered in court decisions+

Taxes refunded for tax years preceding tax year 2005

–Taxes on deannexed territory

–Taxes on property value not taxable in 2006

because it received an exemption or special appraisal for the first time

–

=Adjusted 2005 Taxes

Total Value on the 2006 Certified Appraisal Roll

+Estimated value that will be placed on property

under protest or not included in certification–

Value of property annexed afterJanuary 1, 2005

–Value of new improvements built

after January 1, 2005**–

Value of pollution control propertyexempted for the first time

–

=Adjusted 2006 Taxable Values


Truth-in-Taxation: A Guide for Setting School District Tax Rates (July 2006) — �3

PART 3:

The Rollback Tax Rate

Tax.revenue.falls.into.two.general.categories.—M&O.and.debt.service..M&O.includes.such.things.as.sala-ries,.utilities.and.day-to-day.operations..Debt.service.covers.the.interest.and.principal.on.bonds.and.other.debt. secured. by. property. tax. revenues,. also. called.“interest. and. sinking,”. or. I&S.. Tax. Code. Section.26.012,. subsections. (7).and. (8),. states. the. full. legal.definition.of.debt..Line.27.of.the.Rollback Tax Rate Worksheet. outlines. the. four-part. test. based. on. that.legal.definition.

Calculating.an.effective.tax.rate.does.not.require.the.school.district.to.distinguish.between.M&O.and.debt.services..The.rollback.tax.rate,.however,.is.the.sum.of.the.maximum.M&O.rate.and.debt.service.rate.

Calculating the Rollback Tax RateThe. M&O. portion. of. the. rollback. tax. rate. allows.school.districts.to.add.four.cents.($0.04).to.the.2006.compressed.operating. tax. rate. to.generate.operating.funds.

The.debt.service.rate.portion.is.the.tax.rate.necessary.to.pay.the.school’s.debt.payments.in.the.coming.year..This.part.of. the.calculation.does.not.depend.on. the.prior.year’s.debt.taxes.at.all;.it.simply.considers.what.the.school.district.will.actually.need. for. the.current.year..The.portion.of.the.overall.rate.used.to.retire.debt.may.rise.as.high.as.necessary.without.triggering.the.threat.of.a.rollback.

M&O RateSchool.districts.add.four.cents.($0.04).for.their.high-est. M&O. rate,. as. illustrated. in. Exh�b�t �.. School.districts.then.add.their.2006.debt.service.rate.for.the.final.2006.rollback.tax.rate.

Add�t�onal rollback protect�on for pollut�on con-trol. Any. school. district. may. increase. its. rollback.rate. by. the. rate. that. generates. the. amount. of. funds.the. school. district. will. spend. for. pollution. control.

property,.divided.by.the.school’s.current.total.value..Lines.35.-.38.of.the.Rollback Tax Rate Worksheet.in.Appendix.4.provide.for.calculating.the.additional.rate.to.add.to.the.rollback.rate.

Tax.Code.Section.26.045.permits.the.additional.pro-tection.to.allow.the.school.district.to.raise.its.rate.for.maintenance. and. operation. funds. used. to. pay. for. a.facility,.device.or.method.for.the.control.of.air,.water.or. land.pollution..The.school.district’s.expenses.are.necessary.to.meet.the.requirements.of.a.permit.issued.by.the.Texas.Commission.on.Environmental.Quality.(TCEQ).

A. “facility,. device. or. method. of. control”. means.any. land,. structure,. building,. installation,. excava-tion,. machinery,. equipment. or. device. that. is. used,.constructed,. acquired. or. installed. wholly. or. partly.to. meet. or. exceed. pollution. control. requirements..The. definition. includes. any. attachment. or. addition.to. or. reconstruction,. replacement. or. improvement.of. property.. The. requirements. include. preventing,.monitoring,.controlling.or.reducing.air,.water.or.land.pollution.

The. school. district. must. present. information. to. the.TCEQ’s.executive.director.in.a.permit.application.or.in. a. request. for. permit. exemption..The. information.details:

Exhibit 4:Calculating the M&O Portion

of the Rollback Tax Rate

2005 M&O tax rateX

.8867+

$0.04=

School District M&O Rollback Rate


1.. anticipated.environmental.benefits.from.the.instal-lation.of.the.facility,.device.or.method;

2.. estimated. cost. of. the. facility,. device. or. method;.and

3.. installation’s. purpose. and. the. proportion. of. the.installation.that.is.pollution.control.property.

The.TCEQ.shall. determine. if. the. facility,. device.or.method.is.used.wholly.or.partly.for.pollution.control..If.yes,.then.the.TCEQ.executive.director.shall.issue.a.determination.letter.stating.the.portion.of.the.cost.of.the.installation.for.pollution.control..The.TCEQ.may.charge.a.fee.for.processing.the.information,.making.a.determination.and.issuing.the.letter..School.districts.should. check. with. the. TCEQ. for. rules. regarding.this.process.by.calling.TCEQ’s.Small.Business.and.Environmental.Assistance.Division.at.512/239-6348.

The.school.district.shall.provide.its.tax.assessor.with.a.copy.of.the.TCEQ’s.letter..The.assessor.shall.accept.the.copy.as.conclusive.evidence.and.shall.adjust.the.rollback. tax. rate..The.additional. lines.on. the.calcu-lation. provide. for. entering. the. amount. of. pollution.control.expenditures.and.the.2006.total.taxable.value..The. additional. rate. is. added. to. the. school. district’s.rollback.rate.

In.addition,.school.districts.also.are.able. to.exclude.the. taxable.value.of.property.exempted. for. the.cur-rent. tax. year. for. the. first. time. as. pollution. control.property..Because.the.taxable.value.of.exempt.prop-erty.is.zero,.this.provision.read.literally.has.no.effect..School.districts.that.wish.to.exclude.the.market.value.of. the. exempted. pollution. control. property. should.consult. with. their. attorneys.. A. school. district. sub-tracts.the.exempted.properties’.appraised.values.from.the.current.total.value.in.the.calculation.

Debt ComponentThe.debt. service.portion.of. the. rollback. rate.differs.entirely.from.the.M&O.portion..The.debt.service.rate.portion. is. the. tax. rate. necessary. to. pay. the. school.district’s.debt.payments.in.the.coming.year..This.part.of.the.calculation.does.not.depend.on.the.prior.year’s.debt.taxes.at.all;.it.simply.considers.what.the.school.district. will. actually. need. for. the. current. year.. The.portion.of.the.overall.rate.used.to.retire.debt.may.rise.as.high.as.necessary.without.triggering.the.threat.of.a.rollback.

The. debt. service. component. also. does. not. use. the.adjusted. 2006. taxable. value. (the. current. value. of.properties. taxed. in. the. prior. year).. Instead,. it. uses.the. total. 2006. taxable. value. (the. current. value. of.all. properties). in. the. lower. part. of. the. formula. less.the.2006.taxable.values.of.homesteads.with.tax.ceil-ings,.less.any.tax.increment.financing.(TIF).captured.appraised. value. where. the. school. district. agreed. to.deposit.taxes.into.the.TIF.fund.

The.current.value.of.all.properties.for.school.districts.also. excludes. the. total. taxable. value. of. the. 2006.homesteads.with.tax.ceilings.for.homeowners.age.65.or.older.or.disabled..Debt payments. The. top.half. of. the. formula. is. the.actual.debt.payments.required.for.the.2006-2007.fis-cal.year,.not. the.prior. fiscal.year’s.debt..Remember.that.these.are.debt.payments.that.2006.property.taxes.will.pay.

The.only.adjustment. to. the.2006.debt.service. is. for.anticipated.collection.losses..The.school.district.sub-tracts.the.amount.of.2005.excess.debt.tax.collections.from.the.current.year’s.debt.payments,. then.divides.the. resulting. figure. by. the. anticipated. 2006. collec-tion.rate..The.school.district’s. tax.assessor-collector.will.certify.these.excess.debt.tax.collections.and.the.anticipated.collection.rate..The.following.section.on.anticipated.and.excess.collections.tells.the.tax.collec-tor.how.to.calculate.these.figures.

Ant�c�pated and excess debt collect�ons. A.school.district. that. levies. a. debt. service. tax. must. consider.anticipated.collections.in.calculating.the.debt.service.component.of.its.rollback.tax.rate..The.assessor-col-lector.for.such.a.school.district.must.certify.two.items.to.the.school.board:

•. estimated.debt.collection.rate.for.2006.and

•. excess.debt.tax.collections.for.2005.

Est�mated debt collect�on rate for �006. To. find.the. estimated. collection. rate,. the. assessor-collector.must.first.estimate.the.school.district’s.total.debt.col-lections. from. July. 1,. 2006,. through. June. 30,. 2007..This. estimate. equals. the. total. tax. dollars. that. will.be.collected.for.current.debt.taxes,.delinquent.taxes,.special. appraisal. rollback. taxes,. penalties,. interest.and.the.additional.penalty.for.attorney.fees.under.Tax.Code.Sections.33.07.and.33.08..Obviously,.the.asses-

Part 3: The Rollback Tax Rate


sor-collector.will.not.know.the.precise.amount.until.this. collection. period. is. completed.. Truth-in-taxa-tion. laws,. however,. require. the. assessor-collector’s.estimate.. The. assessor-collector. will. compare. this.amount. to.what. the.school.district.plans. to. levy.for.paying.debt.service.in.the.2006-2007.fiscal.year.

Dividing. the. estimated. collections. by. the. required.debt. payments. gives. the. estimated. collection. rate..Suppose,. for. example,. the. collector. projects. the.school.district.will.take.in.$950,000.in.debt.revenues.during. the.period..The.school.district’s.budget.calls.for. it. to. levy. $1,000,000. in. debt. service. taxes. for.2006.. The. anticipated. collection. rate. is. $950,000.divided.by.$1,000,000,.or.95.percent.

If. the.assessor-collector’s.anticipated.collection.rate.exceeds. 100. percent,. the. assessor-collector. would.use.100.percent.in.the.calculation..Delinquent.taxes.from. prior. years. may. generate.more.than.a.100-percent.rate.

Excess debt tax collect�ons for �005. The. law. also. requires. the.assessor-collector. to.compare. the.amount.of.taxes.actually.collected.in.current.taxes,.delinquent.taxes,.special. appraisal. rollback. taxes,.penalties,. interest. and. the. addi-tional. penalty. under. Tax. Code.Sections.33.07.and.33.08.for.debt.in.2005.from.July.1,.2005.through.June. 30,. 2006..The. assessor-col-lector. compares. this. collected.amount. with. the. amount. that.the. assessor-collector. estimated.to. collect. according. to. the. 2005.anticipated. collection. rate.. If. the.school.district. took. in.more.debt.tax.dollars.than.should.have.been.collected,. the. assessor-collector.certifies. the. amount. of. excess.debt.tax.collections.to.the.school.board.

For. example,. last. year. the. assessor-collector. pro-jected. a. 2005. collection. rate. of. 95. percent. and. the.school. board. levied. $500,000. in. 2005. debt. service.taxes..The. anticipated.debt. tax. collections. for. 2005.were. $475,000. (.95. x. $500,000).. The. assessor-col-

lector. determines. whether. the. total. amount. of. debt.service. taxes. collected. from. July. 1,. 2005,. through.June.30,.2006,.exceeds.$475,000.and.determines.the.amount.of.any.excess..If.the.school.district.collected.$485,000. in. 2005. debt. service. taxes,. the. collector.certifies.excess.debt.tax.collections.of.$10,000..The.school. district. will. subtract. this. $10,000. from. the.2006.debt.payments. to. lower. the.2006.debt. service.rate.

If. the.assessor-collector.projected.a.2005.collection.rate. of. 100. percent. and. collected. more. than. 100.percent,. the. assessor-collector. certifies. excess. debt.collections.of.“0”.(zero).

Dividing. the. adjusted. debt. payments. by. the. total.2006.taxable.values,.times.$100,.gives.the.debt.ser-vice.portion.of.the.rollback.rate..Exh�b�t 5.illustrates.the.debt.service.calculation.

Part 3: The Rollback Tax Rate

Exhibit 5:Calculating the Debt Service Portion of the Rollback Rate

2006 debt payments

Less

2005 excess debt tax collections_______ (divided by) _______ = Adjusted 2006 debt

2006 anticipated collection rate

Adjusted 2006 debt

_______ (divided by) _______ x $100 =2006 debt service rate

2006 total taxable values*

Less

2006 captured appraised value in a TIF fund

* School districts exclude the total taxable value of the 2006 homesteads with tax ceilings for homeowners 65 or older or disabled.

Total Rollback Tax RateTotaling. the.maximum.M&O.rate.and. the.debt. ser-vice.rate.and.multiplying.by.100.(to.convert.to.a.rate.per.$100.of.value).gives.the.rollback.tax.rate.


PART 4:

Required Public Notice and Meeting

Education Code Section 44.004 requires a meet-ing notice for the budget and proposed tax rate for school districts. In addition, Section 44.0041 requires school districts to concurrently post a summary of their proposed budgets. School districts do not fol-low the notice and hearing requirements of Tax Code Chapter 26.

One public notice. A school district publishes one notice—NOTICE OF PUBLIC MEETING TO DISCUSS BUDGET AND PROPOSED TAX RATE—in a local newspaper (see Appendix 5). The notice appears in the newspaper no later than 10 days nor earlier than 30 days before the date of the public meeting.

School districts are not required to publish the effec-tive tax rate and other schedules required by law for other types of taxing units. The rollback tax rate and unencumbered fund balances will appear on this one notice.

Content of the notice. This quarter-page ad includes a comparison of property tax rates, comparison of proposed budget and last year’s budget, comparison of property taxes on an average residence and unen-cumbered fund balances. The notice also includes information about the total appraised and taxable value for all property and all new property for last year and this year and a section listing the school’s total outstanding and unpaid bonded indebtedness.

The law requires the Comptroller’s office to pre-scribe the language and format of the notice. The Comptroller’s Model Form 50-280 is on page 33. It appears as a quarter-page notice—the minimum size required by law. A school district may enlarge the notice if it chooses. The district may also use a larger type size if printing space allows. The school district, however, may not print a notice less than one-quarter page or in smaller type size than the Comptroller’s notice. The notice contains the following items:

• The first paragraph of the notice states the name of the school district and the time, date and place of the public meeting to discuss the school district’s

budget and proposed tax rate. The notice states that the budget determines the adopted tax rate and that public participation in the discussion is invited.

The paragraph also states that the school board may not adopt a rate that exceeds the proposed rate shown on this notice, unless the district pub-lishes a revised notice and holds another public meeting to discuss the revised notice.

Below this information the school district lists the

proposed M&O rate and rate to pay for any bond-ed indebtedness under the captions “Maintenance Tax” and “School Debt Service Tax Approved by Local Voters.”

• The second section of the notice is entitled “Comparison of Proposed Budget with Last Year’s Budget” and shows the percent increase or decrease in the amount budgeted in the preceding fiscal year and the amount budgeted for the fiscal year that begins this tax year for 1) maintenance and operations, 2) debt service, and 3) total expen-ditures.

• The third section is entitled “Total Appraised Value and Total Taxable Value.” This section lists the total appraised and taxable values for all property and all new property in the school district calculated under Tax Code Section 26.04 for last year and the current tax year.

• School districts are next required to state the amount of their outstanding and unpaid bonded indebtedness. This includes the school district’s outstanding principal.

• The next part of the notice is a chart with three columns that state the school district’s tax rates for M&O, interest and sinking fund (I&S) and the total rate. The rows in the chart include:

(1) Last Year’s Rate. This row is the adopted 2005 M&O rate, 2005 I&S rate and the total adopted 2005 rate.


(2) Rate to Maintain Same Level of Mainte-nance & Operations Revenue & Pay Debt Service. These 2006 rates maintain the same level of M&O revenue and pay debt service in the fiscal year. To determine the M&O rate, the amount of local and state funds is divided by the current 2006 taxable values as certified by the chief appraiser (including any changes) at the time this notice is pre-pared. The amount needed for debt service is also determined by the values certified by the chief appraiser (including any changes) at the time this notice is prepared, plus the school district’s anticipated collection rate and any excess taxes collected for debt during the preceding year but not used for debt during that year. The 2006 debt payments, adjusted for excess debt collections and taking into account an anticipated collection rate, is on line 31 on the 2006 Rollback Tax Rate Work-sheet. The 2006 debt tax rate is line 34 of the worksheet. The Texas Education Agency also provides a worksheet to assist school districts in calculating this rate.

(3) Proposed Rate. This row is the proposed 2006 rates for M&O, I&S and the total rate.

This chart also includes two additional columns — Local Revenue Per Student and State Revenue Per Student. The amounts to enter are determined as follows:

(1) To compute the Local Revenue Per Student, the school district multiplies the total taxable value, as determined by the chief appraiser for the applicable year and as adjusted to reflect any changes as of the time this notice is prepared, by the total tax rate and then divides by the number of students in average daily attendance for the applicable school year.

(2) To compute the State Revenue Per Student, the school district divides the amount of state aid received or to be received or the appli-cable school year by the number of students in average daily attendance for the applicable school year.

One footnote appears at the bottom of the chart to explain the I&S rate.

• The sixth part of the notice is another chart — comparing the proposed levy (taxes) with last year’s levy on an average residence in the school district. The rows in this chart are:

(1) Average Market Value of Residences. The first row states the average market value last year and this year of a residence in the school district, disregarding the limited home value that some homeowners may have for the 110-percent appraisal limitation under Tax Code Section 23.23. The district uses the same group of residences for each year to determine the average market value and the following items below.

(2) Average Taxable Value of Residences. The second row is the average taxable value, after subtracting all homestead exemptions appli-cable in each year and taking into account the 110-percent appraisal limitation under Tax Code Section 23.23. The district disre-gards the over-65 and disabled homeowner’s exemptions.

(3) Last Year’s Rate Versus Proposed Rate per $100 Value. The third row is the dis-trict’s adopted rate last year and the proposed rate for this year.

(4) Taxes Due on Average Residence. The fourth row is the amount of taxes on the aver-age residence for both years.

(5) Increase (Decrease) in Taxes. The fifth and final row is the amount of increase or decrease from last year’s taxes to this year’s proposed taxes on the average residence.

The appraisal district can assist with the aver-age market and taxable values of residences. The school district should use the same group of resi-dences for the different rows.

• The seventh part of the notice is a statement that the dollar amount of school taxes on the home-steads of persons age 65 or older (or the surviv-ing spouse) may not increase above the amount paid in the first year after the homeowner turned 65. The law sets out the exact wording of this statement that must be in bold print. The Texas

Part 4: Required Public Notice and Meeting


Legislature did not amend this statement for the disabled homeowner with a tax ceiling.

• The eighth part of the notice is a Notice of Rollback Rate in bold print. Again, the law sets out the exact wording of this statement. The rollback rate is line 35, or line 39, on the 2006 Rollback Tax Rate Worksheet.

• The ninth and final part of the notice is titled Fund Balances. The school district states the estimated unencumbered fund balance(s) remain-ing in the I&S fund and the M&O or general fund balance(s) at the end of the current fiscal year. The district may subtract estimated funds necessary to operate the school district before receiving its first state aid payment for the succeeding school year.

Newspaper requirements. The notice must be at least a quarter page in a standard-size or tabloid-size newspaper. Its headline must appear in 18-point type or larger. The school district may not publish the notice in the legal or classified section of the news-paper. The notice is published at least 10 days but no longer than 30 days before the date of the public meeting.

The school district may publish the notice in a daily, weekly or biweekly newspaper that is published in the school district. If there is not a daily, weekly or biweekly newspaper in the school district, the school board president shall provide for publication in at least one newspaper of general circulation in the county in which the school district’s central adminis-trative office is located.

A legal newspaper must devote at least 25 percent of its space to general interest items. It must be published at least once a week and must have been regularly published for at least 12 months before the notice is placed. Finally, it must be entered as second-class postal matter in the county where it is published.

The United States Postal Service’s change in name of “second-class” mail to “periodicals” is fundamen-tally a name change only.

School district with July 1 fiscal year. A school dis-trict may change its fiscal year to begin July 1 (rather than September 1). If the school district changes its fiscal year, then the chief appraiser shall certify an estimate of the school district’s taxable values to the school district’s assessor by June 7. A school district uses the certified estimate in preparing its budget and tax rate hearing notice (discussed above) if it has not received a regular appraisal roll on or before June 7.

The school district may adopt its budget using the estimate but may not adopt its tax rate until the district receives the certified appraisal roll. After receiving a certified appraisal roll, the school district must publish a revised notice and hold another public meeting to adopt a tax rate that exceeds the rate pro-posed in the first notice using the estimated values or exceeds the school district’s rollback rate calculated using the final certified values.

Municipal school district. A municipal school dis-trict has special requirements for the public hearing on the annual budget and tax rate. A municipal school district is one operating under the former Education Code Chapter 24 (repealed in 1995). A municipal school district follows the city boundaries in which the district is located.

The municipal school district board and the city council shall jointly hold any hearing required by law for adopting the school’s annual budget and property tax rate. Adopting the school budget and the school tax rate requires an affirmative vote of a majority of the school board members present and voting and at least three-quarters of the total of the voting school board members and city council members that are present and voting. If a quorum of the city council is not present at the hearing to adopt the budget and tax rate, then the school board may adopt the budget and tax rate without regard to votes from the city council members.

Both the school district and the city must follow all other procedures for the truth-in-taxation process required by the Tax Code.

Part 4: Required Public Notice and Meeting


PART 5:

Rollback Elections

No pet�t�on requ�red. A. school. district. is. required.to.hold.an.automatic. rollback.election—without. the.petition.process—to.ratify.a.current.year’s.tax.rate,.if.the.school.board.adopts.a.tax.rate.above.the.rollback.rate.. For. 2006,. the. mandatory. election. date. for. all.school. district. rollback. elections. is. September. 30,.2006..School.board.trustees.must.call.for.an.election.no.later.than.August.31,.2006.

The.secretary.of.state.is.required.to.prescribe.proce-dures.necessary.to.implement.school.district.rollback.elections. and. to. ensure. the.proper. and.orderly. con-duct.of.2006.elections..More.information.about.roll-back.election.procedures.may.be.obtained. from. the.Election.Division.of. the.Secretary.of. State’s. Office.at.1-800-252-8683.or.visit.its.Web.site.at.http://www.sos.state.tx.us/elections/index.shtml#contact.

Elect�on results. If. a. simple. majority. of. the. votes.cast. in. the. election. favor. the. adopted. tax. rate,. then.the.adopted.tax.rate.stands..If. the.voters.disapprove.the. adopted. rate,. the. school. district’s. rollback. rate.would.be.the.adopted.tax.rate..Following.the.election.results,. the. school.district.will.mail. its. current.year.tax.bills.

D�saster. School. districts. are. not. required. to. ratify.their. tax. rates. when. responding. to. a. disaster.. No.election. is. called. if. the. school. district. is. spending.increased.revenue.to.respond.to.a.disaster.for.the.year.following. the. year. in. which. the. disaster. occurred..Disasters. include. tornadoes,. hurricanes,. floods. or.other.similar.events.that.affect.the.school.district..The.law.excludes.drought..For.these.purposes,.a.disaster.exists. only. if. the. governor. requests. federal. disaster.assistance.for.the.area.


APPENDIX 1

2006 Planning Calendar

May _____ Mailing of notices of appraised value by chief appraiser.

May 15 Deadline for submitting appraisal records to ARB.

June 7Deadline for chief appraiser to certify an estimated taxable value if school district changed to a July 1 fiscal year.

July 15Deadline for commissioner of education to send notice to school districts required to equal-ize wealth.

July 20 Deadline for ARB to approve appraisal records.

July 25 Deadline for chief appraiser to certify rolls to school districts.

Certification of anticipated collection rate by assessor-collector.

Calculation of rollback tax rate.

72-hour notice for meeting (Open Meetings Notice).

Meeting of school board to decide on public meeting date on budget and proposed tax rate. The school board votes on a proposed tax rate that will be published in the notice for the public meeting.

NOTICE OF PUBLIC MEETING TO DISCUSS BUDGET AND PROPOSED TAX RATE published 10 to 30 days before public meeting. Post proposed budget summary on district’s Web site.

72-hour notice for public meeting (Open Meetings Notice).

Public meeting on budget and proposed tax rate. School board may adopt budget and tax rate after the public meeting. Or, the board may adopt the budget and wait to adopt the tax rate. If the board waits to adopt the tax rate, continue with the next step.

72-hour notice for meeting at which governing body will adopt tax rate (Open Meetings Notice).

Meeting to adopt tax rate. School districts subject to an equalized wealth notice must wait to adopt a tax rate until the commissioner of education certifies that the wealth is equalized [Education Code Section 41.004(c)]. School district must adopt tax rate before September 30 or 60 days after receiving certified appraisal roll, whichever date is later.


APPENDIX 2

2006 Effective Tax Rate WorksheetSee pages 9 to 12 for an explanation of the effective tax rate.

1. 2005 total taxable value. Enter the amount of 2005 taxable value on the 2005 tax roll today. Include any adjust-ments since last year’s certification; exclude Section 25.25(d) one-third over-appraisal corrections from these adjust-ments. This total includes the taxable value of homesteads with tax ceilings (will deduct in line 2) and the captured value for tax increment financing . $

2. 2005 tax ceilings. Enter 2005 total taxable value of homesteads with tax ceilings. These include the homesteads of homeowners age 65 or older or disabled. $

3. Preliminary 2005 adjusted taxable value. Subtract line 2 from line 1. $

4. 2005 total adopted tax rate. $ /$100

5. 2005 taxable value lost because court appeals of ARB decisions reduced 2005 appraised value.

A. Original 2005 ARB values: $ _________________

B. 2005 values resulting from final court decisions: - $_________________

C. 2005 value loss. Subtract B from A. $

6. 2005 taxable value, adjusted for court-ordered reductions.Add line 3 and line 5C. $

7. 2005 taxable value of property in territory the school deannexed after January 1, 2005. Enter the 2005 value of property in deannexed territory. $

8. 2005 taxable value lost because property first qualified for an exemption in 2006. Note that lowering the amount or percentage of an existing exemption does not create a new exemption or reduce taxable value. If the school district increased an original exemption, use the difference between the original exempted amount and the increased exempted amount. Do not include value lost due to freeport exemptions or tax abatements.

A. Absolute exemptions. Use 2005 market value: $ ________________

B. Partial exemptions. 2006 exemption amount or 2006 percentage exemption times 2005 value: + $ ________________

C. Value loss. Add A and B. $

9. 2005 taxable value lost because property first qualified for agricultural appraisal (1-d or 1-d-1), timber appraisal, recreational/scenic appraisal or public access airport special appraisal in 2006. Use only those properties that first qualified in 2006; do not use properties that qualified in 2005.

A. 2005 market value: $ ________________

B. 2006 productivity or special appraised value: - $ ________________

C. Value loss. Subtract B from A. $


10. Total adjustments for lost value. Add lines 7, 8C and 9C. $

11. 2005 adjusted taxable value. Subtract line 10 from line 6. $

12. Adjusted 2005 taxes. Multiply line 4 by line 11 and divide by $100. $

13. Taxes refunded for years preceding tax year 2005. Enter the amount of taxes refunded during the last budget year for tax years preceding tax year 2005. Types of refunds include court decisions, Section 25.25(b) and (c) correc-tions and Section 31.11 payment errors. Do not include refunds for tax year 2005. This line applies only to tax years preceding tax year 2005. $

14. Adjusted 2005 taxes with refunds. Add lines 12 and 13. $

15. Total 2006 taxable value on the 2006 certified appraisal roll today. This value includes only certified values and includes the total taxable value of homesteads with tax ceilings (will deduct in line 18). These homesteads includes homeowners age 65 or older or disabled.

A. Certified values only: $ ________________

B. Pollution control exemption: Deduct the value of property exempted for the current tax year for the first time as pollution control property (use this line based on attorney’s advice): - $ ________________

C. 2006 value. A minus B $ ________________ $

16. Total value of properties under protest or not included on certified appraisal roll.

A. 2006 taxable value of properties under protest. The chief appraiser certifies a list of properties still under ARB protest. The list shows the district’s value and the taxpayer’s claimed value, if any or an estimate of the value if the taxpayer wins. For each of the properties under protest, use the lowest of these values. Enter the total value. $ ______________

B. 2006 value of properties not under protest or included on certified appraisal roll. The chief appraiser gives school districts a list of those taxable properties that the chief appraiser knows about but are not included at appraisal roll certification. These properties also are not on the list of properties that are still under protest. On this list of properties, the chief appraiser includes the market value, appraised value and exemptions for the preceding year and a reasonable estimate of the market value, appraised value and exemptions for the current year. Use the lower market, appraised or taxable value (as appropriate). Enter the total value. $ _______________

C. Total value under protest or not certified. Add A and B. $

17. 2006 tax ceilings. Enter 2006 total taxable value of homesteads with tax ceilings. These include the homesteads of homeowners age 65 or older or disabled.. $

18. 2006 total taxable value. Add lines 15C and 16C. Subtract line 17. $

Appendix 2: 2006 Effective Tax Rate Worksheet


19. Total 2006 taxable value of properties in territory annexed after January 1, 2005. Include both real and personal property. Enter the 2006 value of property in territory annexed, including any territory annexed by the school district. $

20. Total 2006 taxable value of new improvements and new personal property located in new improve-ments. “New” means the item was not on the appraisal roll in 2005. An improvement is a building, structure, fixture or fence erected on or affixed to land. A transportable structure erected on its owner’s land is also included unless it is held for sale or is there only temporarily. New additions to existing improvements may be included if the appraised value can be determined. New personal property in a new improvement must have been brought into the school district after January 1, 2005 and be located in a new improvement. New improvements do include property on which a tax abatement agreement has expired for 2006. New improvements do not include mineral interests produced for the first time, omitted property that is back assessed and increased appraisals on existing property. $

21. Total adjustments to the 2006 taxable value. Add lines 19 and 20. $

22. 2006 adjusted taxable value. Subtract line 21 from line 18. $

23. 2006 effective tax rate. Divide line 14 by line 22 and multiply by $100. $ /$100

Appendix 2: 2006 Effective Tax Rate Worksheet


APPENDIX 3

2006 Rollback Tax Rate WorksheetSee pages 13 to 15 for an explanation of the rollback tax rate.

24. 2005 maintenance and operations (M&O) tax rate. $ /$100

25. 2006 M&O compressed rate. Multiply line 24 times .8867 $ /$100

26. 2006 rollback maintenance and operation rate.Add $0.04 to line 25.(See lines 35 to 38 for additional rate for pollution control expenses) $ /$100

27. Total 2006 debt to be paid with property taxes and additional sales tax revenue.“Debt” means the interest and principal that will be paid on debts that:

(1) are paid by property taxes,(2) are secured by property taxes,(3) are scheduled for payment over a period longer than one year and(4) are not classified in the school district’s budget as M&O expenses.

Debt also includes contractual payments to other school districts that have incurred debts on behalf of this school district, if those debts meet the four conditions above. Include only amounts that will be paid from property tax revenue. Do not include appraisal district budget payments. If using unencumbered funds, subtract unencumbered fund amount used from total debt and list remainder. School districts subtract state aid received for paying principal and interest on debt for facilities through the existing debt allotment (EDA) program and/or instructional facilities allotment (IFA) program. $

28. Certified 2005 excess debt collections. Enter the amount certified by the collector. $

29. Adjusted 2006 debt. Subtract line 28 from line 27. $

30. Certified 2006 anticipated collection rate. Enter the rate certified by the collector. If the rate is 100 percent or greater, enter 100 percent. %

31. 2006 debt adjusted for collections. Divide line 29 by line 30. $

32. Enter the 2006 captured appraised value of real property taxable by the school district in a tax increment financing zone for which the 2006 taxes will be deposited into the tax increment fund. Also, enter any new property value that is subject to a Chapter 313 tax limitation agreement. $

33. 2006 total taxable value. Subtract line 32 from line 18. $

34. 2006 debt tax rate. Divide line 31 by line 33 and multiply by $100. $ /$100

35. 2006 rollback tax rate. Add lines 26 and 34. $ /$100

Truth-in-Taxation: A Guide for Setting School District Tax Rates (July 2006) — 3�

APPENDIX 4

Additional Rollback Protection for Pollution Control

36. Certified expenses from TCEQ. Enter the amount certified in the determination letter from TCEQ. The school dis-trict shall provide its assessor with a copy of the letter. See Part 3, the Rollback Rate, for more details. $

37. 2006 total taxable value. Enter the amount from line 33 of the Rollback Tax Rate Worksheet. $

38. Additional rate for pollution control. Divide line 36 by line 37 and multiply by $100. $ /$100

39. 2006 rollback tax rate, adjusted for pollution control.Add line 38 to line 35. $ /$100

3� — Truth-in-Taxation: A Guide for Setting School District Tax Rates (July 2006)


APPENDIX 5

50-280(Rev. 6-06/2)

T EX

AS

Comptrollerof PublicAccounts

FORM NOTICE OF PUBLIC MEETING TO DISCUSS BUDGET AND PROPOSED TAX RATE

The ______________________________________________________________ will hold a public

meeting at ___________________________________ in _______________________________________

_____________________________________________. The purpose of this meeting is to discuss the school district’s budget that will determine the tax rate that will be adopted. Public participation in the discussion is invited.

The tax rate that is ultimately adopted at this meeting or at a separate meeting at a later date may not exceed the proposed rate shown below unless the district publishes a revised notice containing the same information and comparisons set out below and holds another public meeting to discuss the revised notice.

Maintenance Tax $____________/$100 (Proposed rate for maintenance and operations)

School Debt Service Tax Approved by Local Voters $____________/$100 (proposed rate to pay bonded indebtedness)

Comparison of Proposed Budget with Last Year’s Budget

The applicable percentage increase or decrease (or difference) in the amount budgeted in the preceding fiscal year and the amount budgeted for the fiscal year that begins during the current tax year is indicated for each of the following expenditure categories:

Maintenance and operations ___________% increase or ___________% (decrease)

Debt service ___________% increase or ___________% (decrease)

Total expenditures ___________% increase or ___________% (decrease)

Total Appraised Value and Total Taxable Value(as calculated under Section 26.04, Tax Code)

Preceding Tax Year Current Tax Year

Total appraised value* of all property $________________ $________________

Total appraised value* of new property** $________________ $________________

Total taxable value*** of all property $________________ $________________

Total taxable value*** of new property** $________________ $________________

* “Appraised value” is the amount shown on the appraisal roll and defined by Section 1.04(8), Tax Code.** “New property” is defined by Section 26.012(17), Tax Code.*** “Taxable value” is defined by Section 1.04(10), Tax Code.

Bonded Indebtedness

Total amount of outstanding and unpaid bonded indebtedness* $__________________________

* Outstanding principal.

(name of school district)

(time, date, year) (name of room, building, physical location)

(city, state)

3� — Truth-in-Taxation: A Guide for Setting School District Tax Rates (July 2006)

50-280 (Rev. 6-06/2) (Back)

Comparison of Proposed Rates with Last Year’s Rates

Maintenance Interest Local Revenue State Revenue& Operations & Sinking Fund* Total Per Student Per Student

Last Year’s Rate $ $ * $ $ $

Rate to Maintain SameLevel of Maintenance &Operations Revenue &Pay Debt Service $ $ * $ $ $

Proposed Rate $ $ * $ $ $

* The Interest & Sinking Fund tax revenue is used to pay for bonded indebtedness on construction, equipment, or both. The bonds, and the tax rate necessary to pay those bonds, were approved by the voters of this district.

Comparison of Proposed Levy with Last Year’s Levy on Average Residence

Last Year This Year

Average Market Value of Residences $ $

Average Taxable Value of Residences $ $

Last Year’s Rate Versus Proposed Rate per $100 Value $ $

Taxes Due on Average Residence $ $

Increase (Decrease) in Taxes $

Under state law, the dollar amount of school taxes imposed on the residence homestead of a person 65 years of age or older or of the surviving spouse of such a person, if the surviving spouse was 55 years of age or older when the person died, may not be increased above the amount paid in the first year after the person turned 65, regardless of changes in tax rate or property value.

Notice of Rollback Rate: The highest tax rate the district can adopt before requiring voter approval at an

election is ___________________________. This election will be automatically held if the district adopts

a rate in excess of the rollback rate of ___________________________.

Fund Balances

The following estimated balances will remain at the end of the current fiscal year and are not encumbered with or by a corresponding debt obligation, less estimated funds necessary for operating the district before receipt of the first state aid payment:

Maintenance and Operations Fund Balance(s) $

Interest & Sinking Fund Balance(s) $

(school rollback rate)

(school rollback rate)

Receive tax help via e-mail:[email protected]

For more property tax information, visit our Web site:http://www.window.state.tx.us/taxinfo/proptax

For additional copies write:Texas Comptroller of Public Accounts

Property Tax DivisionP.O. Box 13528

Austin, Texas 78711-35281-800-252-9121; Austin 512/305-9999

The Texas Comptroller of Public Accounts is an equal opportunity employer and does not discriminate on the basis of race, color, religion, sex, national origin, age, or disability in employment or in the provision of any services, programs, or activities.

In compliance with the Americans with Disabilities Act, this document may be requested in alternative formats by calling toll free 1-800-252-5555 or by calling in Austin 512/463-4600.

Texas Comptroller of Public AccountsPublication #96-1212

Revised July 2006

This book is also available on the internet at:http://www.window.state.tx.us/taxinfo/proptax/tnt06schools/

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